Government Relations Questions

• Can you send me a particular state form?
• What are Key Persons?
• How do I address correspondence to my legislator?
• How can I find out who my legislator is?
• Can non-CPAs have an ownership interest in my CPA firm?
• May I sell products or services on commission?
• What must a CPA do to sell insurance products on commission?
• How can a CPA become licensed to sell securities on commission?
• May I place references to certifications in addition to my CPA certification on business cards and stationery?
• May unlicensed individuals include a transmittal letter with financial statements they prepare?
• When are CPAs required to furnish their working papers to clients?

Q: I need a particular form from the state. Can you send me one?
A: The following forms can be downloaded from the State Board of Accountancy's Web site:

• Certificate of Certified Public Accountant Application
• Certificate of Certified Public Accountant Reciprocity Application
• Initial Firm Registration Application
• Continuing Professional Education Program Sponsor Agreement
• Temporary Practice Permit Application
• Request for Certification of Licensure
• Request for Changes to an Individual License
• CPE Reporting Forms

In addition, each PICPA office should have a copy of the above forms.

Please note - Some form requests charge a fee. The State Board's site lists the current fees.

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Q: What are Key Persons?
A: The main function of a key person is to communicate with legislators on issues of importance to the accounting profession. Throughout the legislative process, the PICPA sends legislative information via mail, e-mail, fax, etc. to Key Persons, and requests that they communicate the profession's position with the legislators they know.

Key Persons are asked to attend political functions of specific legislator(s) on behalf of the Political Information Committee of Certified Public Accountants (PIC-CPA). When invitations to fundraisers are received in the Harrisburg office, we then contact the Key Persons to see if they are available to attend the event. For more on Key Persons, go to the Key Persons section of this site.

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Q: How do I address correspondence to my legislator?
A: State Level:

The Honorable [First Name] [Last Name]
PA Senate (or) House of Representatives
Respective Address
Harrisburg, PA 17120
Dear Senator (or) Representative [Last Name]:

Federal Level:

The Honorable [First Name] [Last Name]
United States Senate (or) House of Representatives
Respective Address
Washington, DC Respective ZIP
Dear Senator (or) Dear Congressman/Congresswoman [Last Name]:

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Q: How can I find out who my legislator is?
A: Go to Project Vote Smart at www.vote-smart.org.

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Q: Can non-CPAs have an ownership interest in my CPA firm?
A: Yes, Section 8.8 of the CPA Law permits unlicensed persons to own up to one-third of the equity interests in a firm, so long as the unlicensed persons do not constitute more than one-third in number of the equity owners of the firm. The unlicensed person will be permitted to designate or refer to themselves as a "principal, owner, officer, member, or shareholder" of the firm.

The non-CPA owners cannot hold themselves out as a CPA or PA, have pleaded guilty to or been convicted of a felony, or be in violation of any State Board regulation regarding the character or conduct of a qualified nonlicensee who is the owner of an equity interest in a firm.

Non-CPA owners must have graduated with a baccalaureate or higher degree from a college or university approved by the Pennsylvania Department of Education; and comply with all applicable provisions of the CPA statute and the regulations of the State Board; and be the principal occupation of the individual and shall be in the nature of providing services to the firm or clients of the firm and not solely as an investor or in another commercial or passive capacity.

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Q: May I sell products or services on commission? If so, under what circumstances?
A: The CPA Law permits the receipt of commissions in nonattest situations if there is written disclosure.

The statute, however, says a licensee in public practice shall not, for a commission, recommend or refer any product or service when the licensee or the licensee's firm performs for the client any of the following:

• An audit or review of a financial statement.
• A compilation of a financial statement when the licensee expects, or reasonably might expect, that a third party will use the financial statement and the licensee's compilation report does not disclose a lack of independence.
• An examination of prospective financial information.

Furthermore, the statute requires the State Board to promulgate regulations on the disclosure of the commission to the client. At a minimum, the disclosure must comply with the following:

• be in writing, and be clear and conspicuous
• state the amount of the commission or referral fee, or the basis on which it will be computed
• be made at or prior to the time the recommendation or referral of the product or service is made in the case of a commission or the client retains the licensee to whom the client has been referred in the case of a referral fee.

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Q: What must a CPA do to sell insurance products on commission?
A: CPAs can receive registration information by calling (717) 787-3840. An exam is required for different types of insurance sales. Several vendors sell self-study books to assist individuals in preparation for the exam.

Once an individual is licensed to sell insurance, they can also receive a commission for referring a client to another insurance agent. Without an insurance license, however, a CPA cannot receive a commission for referring a client to an insurance agent. Also, an insurance agent can receive a commission for referring a client only in those areas of insurance in which the agent is licensed.

For further information, contact the Insurance Testing Corp. at (800) 482-6056.

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Q: How can a CPA become licensed to sell securities on commission?
A: To become licensed with the Securities Commission, an individual must first be sponsored by a brokerage firm and then take the securities exam. For further information, contact the Securities Commission at (717) 783-4212.

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Q: May I place references to certifications in addition to my CPA certification on business cards and stationery?
A: The CPA Law states that the use of "certified financial planner" is permitted if the designation has been properly conferred by a private organization after evaluation of the individual's credentials or qualifications. Other designations including the word "certified" also are permissible if the designation is conferred by an organization that evaluates the qualifications of candidates and a disclaimer is included on the stationery of any person using such a designation. The disclaimer must include a statement that the title or designation has been conferred by an organization not affiliated with the Federal or any State government. Disclaimers are not required on business cards, however.

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Q: May unlicensed individuals include a transmittal letter with financial statements they prepare?
A: The CPA Law includes a provision that unlicensed persons who prepare financial information can include a transmittal letter with the information only if the letter is restricted to the following statutorily prescribed language:

"The accompanying financial information of (company) as of (date and year), and for the year then ended have been prepared by (me/us).

This financial information is the representation of the management (owners) of (company)."

Unlicensed individuals may call themselves "accountants" or refer to their services provided as "accounting" only if their transmittal letter includes one of the following statements:

• "I am not a certified public accountant or public accountant."
• "We are not certified public accountants or public accountants."

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Q: When are CPAs required to furnish their working papers to clients?
A: The CPA Law adds a "mechanics lien" provision with regard to working papers. A firm is required to provide the client with a copy of working papers developed by the firm which would ordinarily constitute a part of the client's records and are not otherwise available to the client. However, the firm may require that the fees due the firm with respect to completed engagements be paid before such information is provided.

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